Exploring High-Impact Investments: The Rise of AI and Bitcoin ETFs
Artificial intelligence and cryptocurrency have emerged as exciting investment trends recently. For example, chipmaker Nvidia has seen its stock price soar over 840% since December 2022, while Bitcoin has yielded more than 520% returns in the same timeframe.
Many experts believe this momentum will continue in the coming years. Some argue that artificial intelligence could be the most significant technological development since the 1800s invention of the lightbulb. Additionally, the approval of spot Bitcoin ETFs could foster increased demand for Bitcoin among institutional investors.
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These stock market themes present unique investment opportunities for those willing to wait. Two exchange-traded funds (ETFs) can simplify your entry into these markets: The Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) and iShares Bitcoin Trust (NASDAQ: IBIT). Let’s explore both options.
Investing in Vanguard S&P 500 Growth ETF: Tapping into AI Growth
According to analysts from JPMorgan, Accenture, McKinsey, Goldman Sachs, and PwC, artificial intelligence (AI) is projected to enhance global GDP by 8% to 21% over the next decade. Past technological strides, like the personal computer and the internet, are seen as less impactful compared to AI, which JPMorgan believes will ultimately generate greater economic value.
In the short term, Dan Ives of Wedbush Securities stated in a recent CNBC interview that technology stocks could see a 25% increase in value by 2025 as revenue growth validates significant investments in AI infrastructure. The Vanguard S&P 500 Growth ETF allows investors to gain exposure to 209 growth-oriented stocks within the S&P 500, catering to this potential upswing.
Notably, technology comprises 40% of the Vanguard S&P 500 Growth ETF’s investments, with many portfolio companies positioned to leverage AI effectively. Below are the five largest positions in the ETF:
- Nvidia: 12.7%
- Alphabet: 7.7%
- Apple: 6.7%
- Microsoft: 6.2%
- Meta Platforms: 4.9%
The Vanguard S&P 500 Growth ETF yielded a 76% return over the past two years, correlating with the growing interest in generative AI following ChatGPT’s launch. Meanwhile, the S&P 500 itself returned 55% in the same period. Given these trends, the Vanguard ETF is likely to continue outperforming as AI accelerates growth within technology stocks.
Investors should note the ETF’s expense ratio is 0.1%, which means a $10 annual fee for every $10,000 invested, a notably lower rate compared to similar funds, which typically have fees around 0.94% according to Vanguard.
MicroStrategy Chairman Michael Saylor highlighted that Bitcoin stands out as a scarce commodity that has consistently outperformed the S&P 500. He anticipates Bitcoin will become increasingly essential for institutional portfolios in the future.
Previously, investing in Bitcoin involved navigating complex cryptocurrency exchanges and blockchain wallets. However, spot Bitcoin ETFs, like the iShares Bitcoin Trust, streamline this process, offering a remarkable opportunity for investors to access Bitcoin easily.
With a new presidential administration likely to adopt a more favorable stance on cryptocurrency, several proposals — including Donald Trump’s suggestion for a strategic Bitcoin reserve — could enhance Bitcoin’s legitimacy among institutional investors. This shift may fuel a significant increase in Bitcoin’s valuation, as institutional assets amount to approximately $120 trillion. Even a tiny allocation to Bitcoin could yield a substantial impact on its price.
Evidence of this trend is already observable. The approval of spot Bitcoin ETFs in early 2024 resulted in what was termed “the most successful ETF launch ever,” according to Bernstein analyst Gautam Chhugani. Moreover, these ETFs are being adopted by institutional investors at an unprecedented rate, says Bitwise CIO Matt Hougan.
The iShares Bitcoin Trust has a modest annual fee of 0.25%, translating to a $25 fee per year on a $10,000 investment. In comparison, Coinbase charges fees of 0.4% to 0.6% for transactions under $10,000 with double fees incurred upon buying and selling — making the iShares Bitcoin Trust a more appealing choice for many investors.
Should You Invest $1,000 in Vanguard Admiral Funds – Vanguard S&P 500 Growth ETF?
Before considering an investment in Vanguard Admiral Funds – Vanguard S&P 500 Growth ETF, keep this in mind:
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For instance, if Nvidia had made this list on April 15, 2005… a $1,000 investment back then would now be worth $843,960!*
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*Stock Advisor returns as of January 13, 2025
JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is on The Motley Fool’s board of directors. Randi Zuckerberg, a former market development director at Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is also on the board. Trevor Jennewine holds positions in Nvidia. The Motley Fool has positions in and recommends Accenture Plc, Alphabet, Apple, Bitcoin, Coinbase Global, Goldman Sachs Group, JPMorgan Chase, Meta Platforms, Microsoft, and Nvidia. They also recommend various options for trades related to Accenture Plc and Microsoft. The Motley Fool maintains a disclosure policy.
The views expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.
